Background:
- We are a couple, same age (52), both working and making about the same income.
- We've one child who's off to university in 2 years (most of the cost covered by RESP investments; rest they will pay).
- House in GTA is paid off and worth north of 1MM (about 1.3MM right now based on what's happening on our street)
- No pensions, just savings (pretty much all RRSP/LIRA and a some TFSA, no non-reg) - about 1.5MM (55%/45% Equity/FI in broad ETFs and GIC ladder).
- Retire in 3 or 4 years (around age 55 or 56): savings stop at that point
- We don't like the traffic and crowds in the GTA and want to downsize in retirement to a smaller community
- So we sell the house when we retire or thereabouts, pulling out ~ 400k in the process (balance to fund the new house).
- Live off of the (tax free) 400k cash for 5 or 6 years or so
- CPP starts at 60: the two of us should get 13k total
- Savings grow until age 60 or 61 when we need to start withdrawals: we are hoping they can grow to a minimum of about 2MM by then
- To clear a reasonably comfortable 6k per month after tax, factoring in CPP, we figure we need to withdraw 72k per year, or 3.6%.
So there seems to be some flexibility, which is good. And we always wanted to retire away from the GTA anyway, so why not take advantage of all that home equity to support an early retirement?
Who know what will happen with house prices and the markets over the next 3 or 4 years or so, but I am hopeful at least on the housing side that the price differential between the GTA and our target area will continue to allow us to pull out a very healthy amount to fund this plan!
Any opinions on this plan?